This Is the Most Exciting Aspect of Blockchain Technology, and You're Completely Overlooking It

For more than a year now, cryptocurrencies have dazzled Wall Street and captivated the attention of investors. Last year, we saw the combined market value of all virtual currencies added together rise by more than 3,300%, which are returns that would have taken the stock market decades to match.

Though numerous catalysts are responsible for pushing cryptocurrency valuations higher, including retail investors' emotions, U.S. dollar weakness, and no shortage of news-driven events, the one catalyst that stands head and shoulders above them all is the emergence of blockchain technology, which bitcoin initially put into the spotlight.

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The oft-touted advantages of blockchain, in a nutshell

Blockchain is the digital, distributed, and decentralized ledger that underpins most virtual currencies and is responsible for recording all transactions without the need for a financial intermediary, which is often a bank. The entire reason blockchain was developed was to correct perceived flaws with the current banking system, including excessive transaction fees and long transactions settlement times, especially when payments cross borders.

Though there are actually a laundry list of advantages that blockchain brings to the table, three are usually the focus for discussion. To begin with, decentralization plays an important role in regard to security. With blockchain, there is no data center where transaction information is stored. Rather, it's stored on servers and hard drives all over the world. That ensures no single person, business, or hacker, can ever gain control of a cryptocurrency.

Second, removing banks that act as third parties during transactions is also important. By reducing the number of parties involved in a blockchain transaction, there are fewer fees that need to be collected. This could mean less in the way of fees for consumers, or perhaps a boost in margin for enterprises using blockchain technology.

Lastly, blockchain should help expedite the settling of transactions. Since proofing of transactions is ongoing 24 hours a day, seven days a week, some cryptocurrency blockchains have processing times of just a few seconds – even on transactions that move across borders. Comparatively, cross-border payments can take up to five days to settle under the current banking system.

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Additionally, it's worth pointing out that while blockchain is geared toward the financial services industry, it has plenty of potential in non-currency applications as well.

You've probably overlooked the most exciting aspect of blockchain

While that all may sound exciting -- and that's because it's what Wall Street has been laser-focused on for some time -- it ignores what's arguably the most exciting aspect of blockchain technology. Namely, what it could do in terms of cash flow for underbanked regions of the world.

According to World Bank data from 2014, roughly 2 billion people worldwide don't have a bank account or access to a financial institution by mobile phone or any other electronic device. Though that figure has dropped since 2011, it's still exceptionally high and representative of roughly three out of 10 people on the planet. Without access to traditional banking, cash flow can be a major challenge for these 2 billion people. However, blockchain, which aims to move money and update data in real time, might be able to resolve this most basic issue for underbanked people and countries for a reasonably low cost.

A great example of this in action comes from bext360, a Colorado-based company that's using machines and artificial intelligence to transform the agricultural sector, one product at a time. Bext360 sought to find a solution for global coffee growers who, in many cases, aren't paid for weeks or months after dropping their coffee cherries and beans off with buyers. Manual sorting of beans by buyers for quality often meant delays in farmers getting paid, which is a major cash flow concern for farmers in developing countries. Without being paid, preparing for the next season, sending children to school, and even buying basic-needs like food, water, and clothing, could be difficult.

The solution? Bext360 has partnered with Stellar to bring global coffee farmers who may not have access to traditional banking solutions a means to be paid quickly. In April 2017, bext360 launched a machine utilizing artificial intelligence that could evaluate coffee cherries and beans and sort them based on quality. Farmers would have access to a mobile app to view the amounts of each grade and accept offers for payment. If the farmer accepts payment, the application immediately credits the farmer. This real-time payment would be powered by Stellar's blockchain platform, which has touted an average processing time of just two to five seconds.

In addition to making real-time payments, the coffee supply chain would become more transparent than ever, which consumers would probably love. Stellar's network would be responsible for recording timestamps, values, and amounts; and since blockchain data is transparent and immutable, farmers would know they're being paid fairly and for the correct amount.

Though this is just one small example, it demonstrates how blockchain can resolve developing countries' cash flow issues.

The big blockchain hurdle to overcome

Despite this excitement, success for blockchain isn't guaranteed. Arguably the biggest issue standing in its way is whether businesses will deploy it on a larger scale.

Think about this for a moment: Bitcoin and its blockchain made their debut nearly a decade ago. Even though it offered a completely new means to transfer money on a peer-to-peer basis, it's taken until the past year or two for businesses to move blockchain into demos and small-scale tests. That's nearly a decade basically devoted to proof-of-concept testing. How long will it take before businesses give blockchain a real-world try? That's the $64,000 question.

You see, incorporating blockchain isn't done with the click of a button. For some businesses and industries, incorporating blockchain would mean completely reworking existing networks. It's not necessarily compatible with existing infrastructure, which could mean hefty costs and a lot of time to make the switch. However, no company in its right mind is going to make this switch until blockchain proves itself on a larger scale.

Thus we have our Catch-22: Businesses won't commit to blockchain until scalability is proven, but the only way to prove scalability is by having enterprises commit to using the technology.

Is 2018 the year we finally see enterprises adopt blockchain for larger real-world tests? Only time will tell.

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Sean Williams has no position in any of the stocks or cryptocurrencies mentioned. The Motley Fool has no position in any of the stocks or cryptocurrencies mentioned. The Motley Fool has a disclosure policy.